Issue Overview:
If you're encountering an error message that says, "For investments from 3(c)(1) or 3(c)(7) entities, you must swap to the fund entity type," it's because the entity you're using was initially set up incorrectly as a "Company" rather than a "Fund." This error occurs during the investment entity setup when you indicate reliance on Section 3(c)(1) or 3(c)(7) of the Investment Company Act of 1940.
Why This is Important:
Entities that rely on exemptions under Sections 3(c)(1) or 3(c)(7) must be classified specifically as funds to comply with regulatory requirements. These classifications impact how investors are counted and ensure compliance with the legal limits for investor participation in venture capital funds. Our system is intentionally designed to guide you into correctly classifying your entity to avoid compliance risks or errors in reporting.
How to Resolve the Issue:
Follow these steps to quickly correct the entity classification:
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Create a New Entity:
- Go back to the entity creation page.
- Choose the option labeled "As a Fund – Relying on Section 3(c)(1) or 3(c)(7) of the Investment Company Act of 1940."
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Enter the Correct Information:
- Re-enter your entity details carefully.
- Confirm the entity type selected is explicitly set as a "Fund."
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Submit Your New Entity:
- Ensure all required disclosures and fields are completed.
- Submit the entity for verification by our team.
Special Considerations:
- If your entity was previously created incorrectly as a "Company" and already has prior investments, rest assured that creating the correct "Fund" entity and merging it afterward will retain your complete investment history. Once your new entity is verified, AngelList will merge your original entity into the newly classified "Fund" entity. Your historical investment data, commitments, and activities will remain intact.
- Occasionally, AngelList might request additional information, such as details about underlying beneficial owners, to confirm and maintain compliance.
If you continue to face issues or require further clarification, please contact our support team. Be sure to include a screenshot of any error messages along with detailed context about your issue so we can resolve it promptly.